‘Green’ Business Policies Pay Off : Earth Day Finds Many Companies Reaping Rewards of Conservation

Though many Americans may not yet realize it, even environmentalists credit U.S. industry with making notable progress in cleaning up its act.

As the nation marks another Earth Day, companies from coast to coast have announced efforts to conserve energy, reduce waste, recycle materials or switch to environmentally safer chemicals. The reason: Companies are realizing that it can make good business sense.

For example, AT&T; recently announced it will eliminate ozone-depleting substances from its consumer and business products manufacturing operations by May 15, 2 1/2 years ahead of a worldwide ban.

Earlier this spring, DuPont, the world’s largest manufacturer of the CFCs used in refrigerators, said it will stop making the stuff by the end of 1994--a year earlier than previously planned.

A convergence of powerful forces is fueling business awareness of environmental issues.

* Regulators have put new teeth into enforcement of environmental laws in the post-Reagan-Bush years. The number of criminal and civil cases the U.S. Environmental Protection Agency refers to the Justice Department for prosecution is on the upswing.

* A new generation of executives recognizes the advantages of making environmental considerations part of their business plans. By doing so, they can cut operating costs and avoid expensive liability for environmental damage, among other goals.

* Public opinion is strongly on the side of environmental improvement.

A recent poll conducted by Boston-based Cambridge Energy Research Associates found that, despite the stagnant economy, 83% of Americans would force factories to use “the best available technology� to avoid air pollution even if it meant higher prices for manufactured goods. And 68% said that more government regulation will be needed to stop pollution.

“There are not only demands from environmentalists, but from a variety of stake holders--and from the bottom line--that environmental action be taken,� said Kenneth P. Scott, a researcher with the Corporate Environmental Data Center of the New York based-Council on Economic Priorities, a public interest research group. The Council has issued almost 100 detailed reports on the internal operations of U.S. companies.

“There’s certainly been a sea change in the way (businesses) view specific issues,� Scott said, “one example being waste management practices.� Recycling, switching to reusable materials such as ceramic coffee cups, double-sided photocopying and the like have directly lowered operating costs.

So has energy conservation.

“The area that many companies will initially look at for obligatory compliance--and will be pleasantly surprised--is energy,� said Kenneth S. Williams, senior vice president of corporate operations at Sony Pictures Entertainment Inc.

In January, 1990, Sony Pictures took over the old MGM lot in Culver City.

The company decided to use energy conservation and other environmental techniques in the multimillion-dollar refurbishment of the property.

“We’ve been able to reduce our operating costs by 20% to 25%,� Williams said. Slightly higher up-front costs will still repay Sony’s investment in as little as three years--on buildings designed to last 20 to 25 years.

Sony also plans to save money through a complex plan that includes switching to plain-paper faxes, sending electronic--not paper--memos, recycling wooden production sets and trying substitutes for the conventional plywood made from rain-forest mahogany.

Even some plastics manufacturers have drawn praise from environmentalists.

GE Plastics, a division of General Electric Co., makes a high-quality resin for refillable water and milk containers.

In a program in the nation’s public schools, clear plastic bottles that can be cleaned and reused 100 times, then recycled into plastic construction materials, will keep 52 million conventional paper milk cartons from going into landfills during the 1992-93 school year.

“An environmental ethic is slowly beginning to pervade the way American companies do business,� said Richard A. Denison, a senior scientist at the Environmental Defense Fund.

Denison was a primary consultant to McDonald’s Corp. when it made environmentally inspired changes, such as dropping the Big Mac polystyrene packaging in favor of light cardboard containers. “That clearly saved them money,� he reported more than a year later.

Denison believes food service operations and retail stores--where interaction with the public is most direct--are moving fastest to adopt environmental policies. But this has a ripple effect.

“They are imposing requirements on their suppliers,� Denison said, “and these are working their ways back upstream into the basic materials industries--paper, plastics and metals. . . . I’m very optimistic.�

Even with such progress, many business executives complain that public perceptions about industry have changed little.

Take the example of J. Richard Frauenheim, who recently, during lunch in a Chicago hamburger joint, blew his top over a children’s coloring book.

The coloring book, which the restaurant hands out to restless kids, warns people to avoid products in aerosol spray cans in order to protect the atmosphere’s ozone layer.

Frauenheim is president of Diversified CPC International Inc., the world’s largest manufacturer of hydrocarbon aerosol propellants.

Frauenheim notes that his firm’s products are environmentally benign, powering 85% of the hair spray, deodorant and many other spray-can products used by Americans.

Most countries of the world haven’t used ozone-destroying chlorofluorocarbons--CFCs--in aerosol cans since they were banned 15 years ago.

“It’s scary,� Frauenheim said. “School districts, companies and banks--you name it--to do something for Earth Day, they will throw this advice together, even if it’s information that was published 20 or 25 years ago.�

Business and the Environment

With a nudge from regulators, U.S. businesses are moving quickly to tap new markets for environmental products and clean up their operations.

Businesses Are Marketing More Environmentally Friendly Products

Purchases of “green� products (1993-97 are projections)

In billions of dollars 1992: $110 1993: $122 1994: $127 1995: $137 1996: $143 1997: $154

Fewer Toxic Chemicals Are released

Total reported releases of toxic chemicals by U.S. manufacturers:

In billions of pounds, most recent statistics available 1987: 5.18 1988: 4.81 1989: 4.37 1990: 3.56

EPA Enforcement Has Become More Aggressive

Criminal cases against businesses referred to the Justice Department by EPA: 1987: 41 1988: 59 1989: 60 1990: 65 1991: 81 1992: 107

Civil cases against businesses referred to the Justice Department by the EPA: 1987: 304 1988: 372 1989: 364 1990: 375 1991: 393 1992: 361

Sources: Green MarketAlert, U.S. Environmental Protection Agency